CHENNAI: Tamil Nadu government is likely to face a shortfall of Rs 10,000 crore worth of cash in the month of April due to lockdown and the state is planning to raise funds by borrowing it from financial institutions to see through it, according to official sources.
With few or no collection at all through commercial tax which is usually around Rs 7,000 crore and excise other taxes (around Rs 2,000 crore), the state is struggling for funds to stay afloat paying the usual salaries of state govenment employees among others.
Even the Goods and Service Tax collection has been hit as there is virtually no collection during the last 15 days. Even the motor vehicle tax where the state gets around Rs 500 crore, the collection is hardly any.
Similarly, there is hardly any revenue from the stamp and registration cess, wherein the state manages to collect Rs 1,000 crore.
This has pushed the state's coffers in a bad shape. Usually on any given day the state would have a revenue of Rs 15,000 to Rs 16,000 crore but now the state is grappling for funds, an official source said, adding that the state is trying to manage with limited resources.
The only silver lining in the gloomy phase is the Central government's grant in-aid which was announced much before the lockdown. It is learnt that the state to tide over the phase is looking at borrowing from financial instutions.
This comes as RBI in a study last year has stated that outstanding debt of states has risen over the last five years to 25% of GDP, posing medium-term challenges to its sustainability.
The state has been raising Rs 60,000 crore to Rs 65,000 crore a year through its debt that carry an implicit sovereign guarantee. It is learnt that increasing debt obligations are limiting the scope for greater capital spending by some of the states.